arcee-ai/sec-data-full · Datasets at Hugging Face

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of the lease renewal, the Company will lease the premises at the monthly rate of $ 7,518 for the first year, with scheduled annual increases.
The lease agreement contains customary events of default, representations, warranties, and covenants. The remeasurement of the ROU asset
and liability associated with this operating lease was $ 254,713 . The
following was included in our condensed consolidated balance sheet at June 30, 2022 and December 31, 2021: June
30, 2022 December 31, 2021 Operating lease right-of-use assets $ 3,219,470 $ 3,192,604 Lease liabilities, current portion 703,112 613,696 Lease liabilities, long-term 2,598,368 2,607,862 Total operating lease
liabilities $ 3,301,480 $ 3,221,558 Weighted-average remaining lease term (months) 53 59 Weighted average discount rate 4.37 % 4.29 % Rent
expense for the three and six months ended June 30, 2022 was $ 290,283 and $ 525,721 , respectively. As
of June 30, 2022, maturities of operating lease liabilities were as follows: Year Ending
December 31, Amount 2022 – remaining $ 448,421 2023 830,221 2024 848,210 2025 803,685 2026 514,079 Thereafter 194,495 Total 3,639,511 L imputed interest ( 338,031 ) Total operating lease
liabilities $ 3,301,480 Finance
Leases On
March 28, 2022, the Company entered an equipment financing lease to purchase machinery and equipment totaling $ 316,798 , maturing in January
2028 . On
April 11, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $ 11,706 , maturing in June 2027 . 13 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) As
of June 30, 2022, maturities of finance lease liabilities were as follows: Year Ending
December 31, Amount 2022 – remaining $ 93,270 2023 187,291 2024 170,835 2025 164,067 2026 164,027 Thereafter 167,978 Total payments 947,508 L amount representing
interest ( 128,920 ) Present value of minimum
finance lease payments $ 818,588 As
of June 30, 2022, the weighted-average remaining lease term for all finance leases is 5.20 years. NOTE
9—ACQUISITIONS On
March 30, 2021, the Company acquired 100 % of the outstanding capital stock of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc.
(“Wolo”) for an aggregate purchase price of $ 8,344,056 . For
the three and six months ended June 30, 2022, Wolo contributed revenue of $ 1,983,054 and $ 3,635,045 , respectively, and net loss from
continuing operations of $ 101,409 and $ 426,826 , respectively, which are included in our condensed consolidated statements of operations
for the three and six months ended June 30, 2022. On
October 8, 2021, the Company acquired 100 % of the outstanding capital stock of High Mountain Door & Trim, Inc. (“High Mountain”)
and Sierra Homes, LLC (“Sierra Homes”) for an aggregate purchase price of $ 15,441,173 . For
the three and six months ended June 30, 2022, High Mountain and Sierra Homes contributed revenue of $ 6,500,592 and $ 12,749,941 , respectively,
and net income from continuing operations of $ 128,502 and a net loss from continuing operations of $ 143,145 , respectively, which are included
in our condensed consolidated statements of operations for the three and six months ended June 30, 2022. Pro
Forma Information The
following unaudited pro forma results presented below include the effects of the Wolo, High Mountain and Sierra Homes acquisitions as
if they had been consummated as of January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable
to the acquisitions. Three Months Ended June
30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 12,891,243 $ 12,815,142 $ 24,965,121 $ 26,189,060 Net income (loss) ( 147,668 ) 3,789,235 ( 1,074,876 ) 4,187,111 Net income (loss) attributable to common shareholders’ ( 352,733 ) 3,466,953 ( 1,360,978 ) 2,094,075 Earnings (loss) per share attributable to common shareholders’: Basic $ ( 0.28 ) $ 2.86 $ ( 1.10 ) $ 1.80 Diluted $ ( 0.28 ) $ 2.16 $ ( 1.10 ) $ 1.34 These
unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results
of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future
results of operations. 14 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) NOTE 10—RELATED
PARTIES Management
Services Agreement On
April 15, 2013, the Company and 1847 Partners LLC (the “Manager”) entered into a management services agreement, pursuant
to which the Company is required to pay the Manager a quarterly management fee equal to 0.5% of its adjusted net assets for services
performed (the “Parent Management Fee”). The amount of the Parent Management Fee with respect to any fiscal quarter is (i)
reduced by the aggregate amount of any management fees received by the Manager under any offsetting management services agreements with
respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) Parent Management Fees received
by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid
Parent Management Fees. The Company expensed $ 0 in Parent Management Fees for the three and six months ended June 30, 2022 and $ 110,00 for the three and six months ended June 30, 2021. Offsetting
Management Services Agreements The
Company’s subsidiary 1847 Asien Inc. (“1847 Asien”) entered into an offsetting management services agreement with the
Manager on May 28, 2020, the Company’s subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) entered into an offsetting management
services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021) and the Company’s subsidiary
1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with the Manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Asien appointed the Manager to provide certain services to it for a quarterly
management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), 1847 Cabinet
appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted
net assets (as defined in the management services agreement), which was increased to $125,000 or 2% of adjusted net assets on October
8, 2021, and 1847 Wolo appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of
$75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, in each case that if the aggregate
amount of management fees paid or to be paid by such entities, together with all other management fees paid or to be paid to the Manager
under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of our gross income in any fiscal year
or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such entities shall be reduced, on a pro rata
basis determined by reference to the other management fees to be paid to the Manager under other offsetting management services agreements. 1847 Asien expensed management fees of $ 75,000 and $ 150,000 for the three and six months ended June 30, 2022, respectively, and $ 75,000 and $ 150,000 for the three and six months ended
June 30, 2021, respectively. 1847 Cabinet expensed management fees of $ 125,000 and $ 250,000 for the three and six months ended June 30, 2022, respectively, and $ 75,000 and $ 150,000 for the three and six months ended
June 30, 2021, respectively. 1847 Wolo expensed management fees of $ 75,000 and $ 150,000 for the three and six months ended June 30, 2022, respectively, and $ 75,000 for the three and six months ended June 30, 2021. On a consolidated basis, the Company expensed
total management fees of $ 275,000 and $ 550,000 for the three and six months ended June 30, 2022, respectively, and $ 225,000 and $ 375,000 for the three and six months ended June 30, 2021, respectively. Advances From
time to time, the Company has received advances from its chief executive officer to meet short-term working capital needs. As of June
30, 2022 and December 31, 2021, a total of $ 118,834 in advances from related parties are outstanding. These advances are unsecured, bear
no interest, and do not have formal repayment terms or arrangements. As
of June 30, 2022 and December 31, 2021, the Manager has funded the Company $ 74,928 in related party advances. These advances are unsecured,
bear no interest, and do not have formal repayment terms or arrangements. 15 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Building
Lease On
September 1, 2020, Kyle’s entered into an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, who are officers
of Kyle’s and principal shareholders of the Company. The lease is for a term of five years, with an option for a renewal term of
five years and provides for a base rent of $ 7,000 per month for the first 12 months, which will increase to $ 7,210 for months 13-16 and
to $ 7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the
lease term. The total
rent expense under this related party leases was $ 21,776 and $ 43,534 for the three and six months ended June 30, 2022. NOTE 11—MEZZANINE
EQUITY Series
A Senior Convertible Preferred Shares On
September 30, 2020, the Company executed a share designation, which was amended on November 20, 2020, March 26, 2021 and September 29,
2021, to designate 4,450,460 of its shares as series A senior convertible preferred shares. Following is a description of the rights
of the series A senior convertible preferred shares. Ranking. The series A senior convertible preferred shares rank, with respect to the payment of dividends and the distribution of assets upon
liquidation, (i) senior to all common shares, allocation shares, and each other class or series that is not expressly made senior to
or on parity with the series A senior convertible preferred shares; (ii) on parity with the series B senior convertible preferred shares
and each other class or series that is not expressly subordinated or made senior to the series A senior convertible preferred shares;
and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and
each other class or series that is expressly made senior to the series A senior convertible preferred shares. Dividend
Rights. Holders of series A senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0 % of the stated
value ($ 2.00 per share, subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative.
Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common shares at the Company’s discretion.
Dividends payable in common shares shall be calculated based on a price equal to eighty percent ( 80 %) of the volume weighted average
price for the common shares on the Company’s principal trading market (the “VWAP”) during the five (5) trading days
immediately prior to the applicable dividend payment date; provided, however, that if the common shares are not registered, and Rule
144 rulemaking referred to below is effective on the payment date, the dividends payable in common shares shall be calculated based upon
the fixed price of $ 1.57 ; provided further, that the Company may only elect to pay dividends in common shares based upon such fixed price
if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment date is $ 1.57 or higher. Liquidation
Rights. Subject to the rights of creditors and the holders of any senior securities or parity securities (in each case, as defined
in the share designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets
of the Company (whether capital or surplus) shall be made to or set apart for the holders of securities that are junior to the series
A senior convertible preferred shares as to the distribution of assets on any liquidation of the Company, including the common shares
and allocation shares, each holder of outstanding series A senior convertible preferred shares shall be entitled to receive an amount

of the lease renewal, the Company will lease the premises at the monthly rate of $ 7,518 for the first year, with scheduled annual increases.

The lease agreement contains customary events of default, representations, warranties, and covenants. The remeasurement of the ROU asset

and liability associated with this operating lease was $ 254,713 . The

following was included in our condensed consolidated balance sheet at June 30, 2022 and December 31, 2021: June

30, 2022 December 31, 2021 Operating lease right-of-use assets $ 3,219,470 $ 3,192,604 Lease liabilities, current portion 703,112 613,696 Lease liabilities, long-term 2,598,368 2,607,862 Total operating lease

liabilities $ 3,301,480 $ 3,221,558 Weighted-average remaining lease term (months) 53 59 Weighted average discount rate 4.37 % 4.29 % Rent

expense for the three and six months ended June 30, 2022 was $ 290,283 and $ 525,721 , respectively. As

of June 30, 2022, maturities of operating lease liabilities were as follows: Year Ending

December 31, Amount 2022 – remaining $ 448,421 2023 830,221 2024 848,210 2025 803,685 2026 514,079 Thereafter 194,495 Total 3,639,511 L imputed interest ( 338,031 ) Total operating lease

liabilities $ 3,301,480 Finance

Leases On

March 28, 2022, the Company entered an equipment financing lease to purchase machinery and equipment totaling $ 316,798 , maturing in January

2028 . On

April 11, 2022, the Company entered in an equipment financing lease to purchase machinery and equipment totaling $ 11,706 , maturing in June 2027 . 13 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) As

of June 30, 2022, maturities of finance lease liabilities were as follows: Year Ending

December 31, Amount 2022 – remaining $ 93,270 2023 187,291 2024 170,835 2025 164,067 2026 164,027 Thereafter 167,978 Total payments 947,508 L amount representing

interest ( 128,920 ) Present value of minimum

finance lease payments $ 818,588 As

of June 30, 2022, the weighted-average remaining lease term for all finance leases is 5.20 years. NOTE

9—ACQUISITIONS On

March 30, 2021, the Company acquired 100 % of the outstanding capital stock of Wolo Mfg. Corp and Wolo Industrial Horn & Signal, Inc.

(“Wolo”) for an aggregate purchase price of $ 8,344,056 . For

the three and six months ended June 30, 2022, Wolo contributed revenue of $ 1,983,054 and $ 3,635,045 , respectively, and net loss from

continuing operations of $ 101,409 and $ 426,826 , respectively, which are included in our condensed consolidated statements of operations

for the three and six months ended June 30, 2022. On

October 8, 2021, the Company acquired 100 % of the outstanding capital stock of High Mountain Door & Trim, Inc. (“High Mountain”)

and Sierra Homes, LLC (“Sierra Homes”) for an aggregate purchase price of $ 15,441,173 . For

the three and six months ended June 30, 2022, High Mountain and Sierra Homes contributed revenue of $ 6,500,592 and $ 12,749,941 , respectively,

and net income from continuing operations of $ 128,502 and a net loss from continuing operations of $ 143,145 , respectively, which are included

in our condensed consolidated statements of operations for the three and six months ended June 30, 2022. Pro

Forma Information The

following unaudited pro forma results presented below include the effects of the Wolo, High Mountain and Sierra Homes acquisitions as

if they had been consummated as of January 1, 2021, with adjustments to give effect to pro forma events that are directly attributable

to the acquisitions. Three Months Ended June

30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues $ 12,891,243 $ 12,815,142 $ 24,965,121 $ 26,189,060 Net income (loss) ( 147,668 ) 3,789,235 ( 1,074,876 ) 4,187,111 Net income (loss) attributable to common shareholders’ ( 352,733 ) 3,466,953 ( 1,360,978 ) 2,094,075 Earnings (loss) per share attributable to common shareholders’: Basic $ ( 0.28 ) $ 2.86 $ ( 1.10 ) $ 1.80 Diluted $ ( 0.28 ) $ 2.16 $ ( 1.10 ) $ 1.34 These

unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results

of operations would have been if the acquisitions had occurred at the beginning of the period presented, nor are they indicative of future

results of operations. 14 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) NOTE 10—RELATED

PARTIES Management

Services Agreement On

April 15, 2013, the Company and 1847 Partners LLC (the “Manager”) entered into a management services agreement, pursuant

to which the Company is required to pay the Manager a quarterly management fee equal to 0.5% of its adjusted net assets for services

performed (the “Parent Management Fee”). The amount of the Parent Management Fee with respect to any fiscal quarter is (i)

reduced by the aggregate amount of any management fees received by the Manager under any offsetting management services agreements with

respect to such fiscal quarter, (ii) reduced (or increased) by the amount of any over-paid (or under-paid) Parent Management Fees received

by (or owed to) the Manager as of the end of such fiscal quarter, and (iii) increased by the amount of any outstanding accrued and unpaid

Parent Management Fees. The Company expensed $ 0 in Parent Management Fees for the three and six months ended June 30, 2022 and $ 110,00 for the three and six months ended June 30, 2021. Offsetting

Management Services Agreements The

Company’s subsidiary 1847 Asien Inc. (“1847 Asien”) entered into an offsetting management services agreement with the

Manager on May 28, 2020, the Company’s subsidiary 1847 Cabinet Inc. (“1847 Cabinet”) entered into an offsetting management

services agreement with the Manager on August 21, 2020 (which was amended and restated on October 8, 2021) and the Company’s subsidiary

1847 Wolo Inc. (“1847 Wolo”) entered into an offsetting management services agreement with the Manager on March 30, 2021. Pursuant to the offsetting management services agreements, 1847 Asien appointed the Manager to provide certain services to it for a quarterly

management fee equal to the greater of $75,000 or 2% of adjusted net assets (as defined in the management services agreement), 1847 Cabinet

appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of $75,000 or 2% of adjusted

net assets (as defined in the management services agreement), which was increased to $125,000 or 2% of adjusted net assets on October

8, 2021, and 1847 Wolo appointed the Manager to provide certain services to it for a quarterly management fee equal to the greater of

$75,000 or 2% of adjusted net assets (as defined in the management services agreement); provided, however, in each case that if the aggregate

amount of management fees paid or to be paid by such entities, together with all other management fees paid or to be paid to the Manager

under other offsetting management services agreements, exceeds, or is expected to exceed, 9.5% of our gross income in any fiscal year

or the Parent Management Fee in any fiscal quarter, then the management fee to be paid by such entities shall be reduced, on a pro rata

basis determined by reference to the other management fees to be paid to the Manager under other offsetting management services agreements. 1847 Asien expensed management fees of $ 75,000 and $ 150,000 for the three and six months ended June 30, 2022, respectively, and $ 75,000 and $ 150,000 for the three and six months ended

June 30, 2021, respectively. 1847 Cabinet expensed management fees of $ 125,000 and $ 250,000 for the three and six months ended June 30, 2022, respectively, and $ 75,000 and $ 150,000 for the three and six months ended

June 30, 2021, respectively. 1847 Wolo expensed management fees of $ 75,000 and $ 150,000 for the three and six months ended June 30, 2022, respectively, and $ 75,000 for the three and six months ended June 30, 2021. On a consolidated basis, the Company expensed

total management fees of $ 275,000 and $ 550,000 for the three and six months ended June 30, 2022, respectively, and $ 225,000 and $ 375,000 for the three and six months ended June 30, 2021, respectively. Advances From

time to time, the Company has received advances from its chief executive officer to meet short-term working capital needs. As of June

30, 2022 and December 31, 2021, a total of $ 118,834 in advances from related parties are outstanding. These advances are unsecured, bear

no interest, and do not have formal repayment terms or arrangements. As

of June 30, 2022 and December 31, 2021, the Manager has funded the Company $ 74,928 in related party advances. These advances are unsecured,

bear no interest, and do not have formal repayment terms or arrangements. 15 1847 HOLDINGS LLC NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2022 (UNAUDITED) Building

Lease On

September 1, 2020, Kyle’s entered into an industrial lease agreement with Stephen Mallatt, Jr. and Rita Mallatt, who are officers

of Kyle’s and principal shareholders of the Company. The lease is for a term of five years, with an option for a renewal term of

five years and provides for a base rent of $ 7,000 per month for the first 12 months, which will increase to $ 7,210 for months 13-16 and

to $ 7,426 for months 37-60. In addition, Kyle’s is responsible for all taxes, insurance and certain operating costs during the

lease term. The total

rent expense under this related party leases was $ 21,776 and $ 43,534 for the three and six months ended June 30, 2022. NOTE 11—MEZZANINE

EQUITY Series

A Senior Convertible Preferred Shares On

September 30, 2020, the Company executed a share designation, which was amended on November 20, 2020, March 26, 2021 and September 29,

2021, to designate 4,450,460 of its shares as series A senior convertible preferred shares. Following is a description of the rights

of the series A senior convertible preferred shares. Ranking. The series A senior convertible preferred shares rank, with respect to the payment of dividends and the distribution of assets upon

liquidation, (i) senior to all common shares, allocation shares, and each other class or series that is not expressly made senior to

or on parity with the series A senior convertible preferred shares; (ii) on parity with the series B senior convertible preferred shares

and each other class or series that is not expressly subordinated or made senior to the series A senior convertible preferred shares;

and (iii) junior to all indebtedness and other liabilities with respect to assets available to satisfy claims against the Company and

each other class or series that is expressly made senior to the series A senior convertible preferred shares. Dividend

Rights. Holders of series A senior convertible preferred shares are entitled to dividends at a rate per annum of 14.0 % of the stated

value ($ 2.00 per share, subject to adjustment). Dividends shall accrue from day to day, whether or not declared, and shall be cumulative.

Dividends shall be payable quarterly in arrears on each dividend payment date in cash or common shares at the Company’s discretion.

Dividends payable in common shares shall be calculated based on a price equal to eighty percent ( 80 %) of the volume weighted average

price for the common shares on the Company’s principal trading market (the “VWAP”) during the five (5) trading days

immediately prior to the applicable dividend payment date; provided, however, that if the common shares are not registered, and Rule

144 rulemaking referred to below is effective on the payment date, the dividends payable in common shares shall be calculated based upon

the fixed price of $ 1.57 ; provided further, that the Company may only elect to pay dividends in common shares based upon such fixed price

if the VWAP for the five (5) trading days immediately prior to the applicable dividend payment date is $ 1.57 or higher. Liquidation

Rights. Subject to the rights of creditors and the holders of any senior securities or parity securities (in each case, as defined

in the share designation), upon any liquidation of the Company or its subsidiaries, before any payment or distribution of the assets

of the Company (whether capital or surplus) shall be made to or set apart for the holders of securities that are junior to the series

A senior convertible preferred shares as to the distribution of assets on any liquidation of the Company, including the common shares

and allocation shares, each holder of outstanding series A senior convertible preferred shares shall be entitled to receive an amount